Bartleby Sitemap - Textbook Solutions
All Textbook Solutions for College Accounting, Chapters 1-27
7RQ8RQ9RQ10RQ11RQWhat steps are followed in posting from the cash payments journal to the general ledger?What steps are followed in posting from the cash payments journal to the accounts payable ledger?RECORDING TRANSACTIONS IN THE PROPER JOURNAL Identify the journal (sales, cash receipts, purchases, cash payments, or general) in which each of the following transactions should be recorded: (a) Sold merchandise on account. (b) Purchased delivery truck on account for use in the business. (c) Received payment from customer on account. (d) Purchased merchandise on account. (e) Issued check in payment of electric bill. (f) Recorded depreciation on factory building.2SEAJOURNALIZING CASH RECEIPTS Enter the following transactions in a cash receipts journal: July 6 Daren Chesbrough made payment on account, 527. 10 Made cash sales for the week, 2,470. 14Adam Casady made payment on account, 394. 15Yue Zou made payment on account, 203. 17Made cash sales for the week, 2,360.JOURNALIZING PURCHASES TRANSACTIONS Enter the following transactions in a purchases journal like the one below: May 3 Purchased merchandise from Climen, 7,200. Invoice No. 321, dated May 1, terms n/30. 9 Purchased merchandise from Misho, 3,100. Invoice No. 614, dated May 8, terms 2/10, n/30. 18 Purchased merchandise from Alelu Distributors, 4,700. Invoice No. 180, dated May 15, terms 1/15, n/30. 23 Purchased merchandise from Saltex, 5,900. Invoice No. 913, dated May 22, terms 1/10, n/30.5SEASALES JOURNAL Futi Ishanyan owns a retail business and made the following sales during the month of August 20--. There is a 6% sales tax on all sales. Aug. 1Sale No. 213 to Jeter Manufacturing Co., 1,300, plus sales tax. 3Sale No. 214 to Hassan Co., 2,600, plus sales tax. 7Sale No. 215 to Habrock, Inc., 1,700, plus sales tax. (Open a new account for this customer. Address is 125 Fishers Dr., Noblesville, IN 478708867.) 11Sale No. 216 to Seth Mowbray, 1,400, plus sales tax. 18Sale No. 217 to Hassan Co., 3,960, plus sales tax. 22Sale No. 218 to Jeter Manufacturing Co., 2,800, plus sales tax. 30Sale No. 219 to Seth Mowbray, 1,900, plus sales tax. Required 1. Record the transactions in the sales journal starting with page 8. Total and verify the column totals and rule the columns. 2. Post from the sales journal to the general ledger and accounts receivable ledger accounts. Use account numbers as shown in the chapter.7SPA8SPAPURCHASES JOURNAL J. B. Speck, owner of Specks Galleria, made the following purchases of merchandise on account during the month of September: Sept. 3Purchase Invoice No. 415, 2,650, from Smith Distributors. 8Purchase Invoice No. 132, 3,830, from Michaels Wholesaler. 11Purchase Invoice No. 614, 3,140, from J. B. Sanders Co. 18Purchase Invoice No. 329, 2,250, from Bateman Jones, Inc. 23Purchase Invoice No. 867, 4,160, from Smith Distributors. 27Purchase Invoice No. 744, 1,980, from Anderson Company. 30Purchase Invoice No. 652, 2,780, from Michaels Wholesaler. Required 1. Record the transactions in the purchases journal. Total and rule the journal. 2. Post from the purchases journal to the general ledger and accounts payable ledger accounts. Use account numbers as shown in the chapter.PURCHASES JOURNAL, GENERAL LEDGER, AND ACCOUNTS PAYABLE LEDGER The purchases journal of Kevins Kettle, a small retail business, is as follows: Required 1. Post the total of the purchases journal to the appropriate general ledger accounts. Use account numbers as shown in the chapter. 2. Post the individual purchase amounts to the accounts payable ledger.11SPAPURCHASES JOURNAL, CASH PAYMENTS JOURNAL, AND GENERAL JOURNAL Freddy Flint owns a small retail business called Flints Fantasy. The cash account has a balance of 20,000 on July 1. The following transactions occurred during July: July 1Issued Check No. 414 in payment of July rent, 1,500. 1Purchased merchandise on account from Tangs Toys, Invoice No. 311, 2,700, terms 2/10, n/30. July 3Purchased merchandise on account from Sillas Company, Invoice No. 812, 3,100, terms 1/10, n/30. 5Returned merchandise purchased from Tangs Toys, receiving a credit memo on the amount owed, 500. 8Purchased merchandise on account from Daisys Dolls, Invoice No. 139, 1,900, terms 2/10, n/30. 11Issued Check No. 415 to Tangs Toys for merchandise purchased on account, less return of July 5 and less 2% discount. 13Issued Check No. 416 to Sillas Company for merchandise purchased on account, less 1% discount. 15Returned merchandise purchased from Daisys Dolls, receiving a credit memo on the amount owed, 400. 18Issued Check No. 417 to Daisys Dolls for merchandise purchased on account, less return of July 15 and less 2% discount. 25Purchased merchandise on account from Allied Business, Invoice No. 489, 2,450, terms n/30. 26Purchased merchandise on account from Tangs Toys, Invoice No. 375, 1,980, terms 2/10, n/30. 29Purchased merchandise on account from Sillas Company, Invoice No. 883, 3,460, terms 1/10, n/30. 31Freddy Flint withdrew cash for personal use, 2,000. Issued Check No. 418. 31Issued Check No. 419 to Glisan Distributors for a cash purchase of merchandise, 975. Required 1. Record the transactions in the purchases journal, cash payments journal, and general journal. Total and rule the purchases and cash payments journals. Prove the cash payments journal. 2. Post from the journals to the general ledger and accounts payable ledger accounts. Use general ledger account numbers as shown in the chapter.RECORDING TRANSACTIONS IN THE PROPER JOURNAL Identify the journal (sales, cash receipts, purchases, cash payments, or general) in which each of the following transactions should be recorded: (a) Issued credit memo to customer for merchandise returned. (b) Sold merchandise for cash. (c) Purchased merchandise on account. (d) Issued checks to employees in payment of wages. (e) Purchased factory supplies on account. (f) Sold merchandise on account.2SEB3SEBJOURNALIZING PURCHASES TRANSACTIONS Enter the following transactions in a purchases journal like the one below: Jan. 3 Purchased merchandise from Feng, 6,000. Invoice No. 416, dated January 1, terms 2/10, n/30. 12 Purchased merchandise from Miranda, 9,000. Invoice No. 624, dated January 10, terms n/30. 19 Purchased merchandise from J. B. Barba, 6,400. Invoice No. 190, dated January 18, terms 1/10, n/30. 26 Purchased merchandise from Ramirez, 3,700. Invoice No. 923, dated January 25, terms 1/15, n/30.JOURNALIZING CASH PAYMENTS Sandcastles Northwest uses a cash payments journal. Prepare a cash payments journal using the same format and account titles as illustrated in the chapter. Record the following payments for merchandise purchased: Apr. 5 Issued Check No. 429 to Standard Industries for merchandise purchased April 3, 8,000, terms 2/10, n/30. Payment is made within the discount period. 19 Issued Check No. 430 to Finest Company for merchandise purchased April 10, 5,300, terms 1/10, n/30. A credit memo had previously been received from Finest Company for merchandise returned, 300. Payment is made within the discount period after deduction for the return dated April 12. 21 Issued Check No. 431 to Funny Follies for merchandise purchased March 21, 3,250, terms n/30. 29 Issued Check No. 432 to Classic Data for merchandise purchased April 20, 7,000, terms 2/10, n/30. Payment is made within the discount period.SALES JOURNAL T. M. Maxwell owns a retail business and made the following sales during the month of July 20--. There is a 5% sales tax on all sales. July 1Sale No. 101 to Saga, Inc., 1,200, plus sales tax. 8Sale No. 102 to Vinnie Ward, 2,100, plus sales tax. 15Sale No. 103 to Dvorak Manufacturing, 4,300, plus sales tax. 21Sale No. 104 to Vinnie Ward, 1,800, plus sales tax. 24Sale No. 105 to Zapata Co., 1,600, plus sales tax. (Open a new account for this customer. Address is 789 N. Stafford Dr., Bloomington, IN 474016201.) 29Sale No. 106 to Saga, Inc., 1,450, plus sales tax. Required 1. Record the transactions in the sales journal. Total and verify the column totals and rule the columns. 2. Post the sales journal to the general ledger and accounts receivable ledger accounts. Use account numbers as shown in the chapter.7SPBSALES JOURNAL, CASH RECEIPTS JOURNAL, AND GENERAL JOURNAL Paul Jackson owns a retail business. The following sales, returns, and cash receipts are for April 20--. There is a 7% sales tax. Apr. 1Sold merchandise to O. L. Meyers, 2,100, plus sales tax. Sale No. 111. 3Sold merchandise to Andrew Plaa, 1,000, plus sales tax. Sale No. 112. 6O. L. Meyers returned merchandise from Sale No. 111 for a credit (Credit Memo No. 42), 50, plus sales tax. 7Made cash sales for the week, 3,240, plus sales tax. 9Received payment from O. L. Meyers for Sale No. 111, less Credit Memo No. 42. 12Sold merchandise to Melissa Richfield, 980, plus sales tax. Sale No. 113. 14Made cash sales for the week, 2,180, plus sales tax. 17Melissa Richfield returned merchandise from Sale No. 113 for a credit (Credit Memo No. 43), 40, plus sales tax. 19Sold merchandise to Kelsay Munkres, 1,020, plus sales tax. Sale No. 114. 21Made cash sales for the week, 2,600, plus sales tax. 24Sold merchandise to O. L. Meyers, 920, plus sales tax. Sale No. 115. 27Sold merchandise to Andrew Plaa, 1,320, plus sales tax. Sale No. 116. 28Made cash sales for the week, 2,800, plus sales tax. Beginning general ledger account balances were as follows: Beginning customer account balances were as follows: Required 1. Record the transactions in the sales journal, cash receipts journal, and general journal. Total, verify, and rule the columns where appropriate at the end of the month. 2. Post from the journals to the general ledger and accounts receivable ledger accounts. Use account numbers as shown in the chapter.PURCHASES JOURNAL Ann Benton, owner of Bentons Galleria, made the following purchases of merchandise on account during the month of October: REQUIRED 1. Record the transactions in the purchases journal. Total and rule the journal. 2. Post from the purchases journal to the general ledger and accounts payable ledger accounts. Use account numbers as shown in the chapter.PURCHASES JOURNAL, GENERAL LEDGER, AND ACCOUNTS PAYABLE LEDGER The purchases journal of Ryans Rats Nest, a small retail business, is as follows: REQUIRED 1. Post the total of the purchases journal to the appropriate general ledger accounts. Use account numbers as shown in the chapter. 2. Post the individual purchase amounts to the accounts payable ledger.11SPBPURCHASES JOURNAL, CASH PAYMENTS JOURNAL, AND GENERAL JOURNAL Debbie Mueller owns a small retail business called Debbies Doll House. The cash account has a balance of 20,000 on July 1. The following transactions occurred during July: REQUIRED 1. Record the transactions in the purchases journal, cash payments journal, and general journal. Total and rule the purchases and cash payments journals. Prove the cash payments journal. 2. Post from the journals to the general ledger and accounts payable ledger accounts. Use general ledger account numbers as shown in the chapter.1MYWJudy Baresford, the store manager of Comfort Futons, noticed that the amount of time the two bookkeepers were spending on accounts receivable, accounts payable, and cash receipts was increasing due to the stores increase in sales. A friend of Judys who is also a store manager suggested that she might want to have some special journals designed that would reduce the amount of work involved in the day-to-day bookkeeping at her store. Judy approached Jon Fortner and Sue Stavio, the bookkeepers, and asked them to come up with a proposal for special journals. During lunch, Jon told Sue he thought designing special journals would be a lot of work and it was not in his job description. Sue told him not to worry because she would just copy pages of special journals from her accounting textbook and they could submit these journals as their own design. Jon liked the idea and they agreed to meet the next night, scan the journals into Word, and submit them to Judy the following morning. 1. Do you think Sues suggestion is unethical? Why or why not? 2. In using the generic special journals from Sues accounting textbook, what possible problems can you foresee? 3. If you were Judy, how would you respond to Sue and Jons plan?During the month of October 20--, The Pink Petal flower shop engaged in the following transactions: Selected account balances as of October 1 were as follows: The Pink Petal also had the following subsidiary ledger balances as of October 1: REQUIRED 1. Record the transactions in a sales journal (page 7), cash receipts journal (page 10), purchases journal (page 6), cash payments journal (page 11), and general journal (page 5). Total, verify, and rule the columns where appropriate at the end of the month. 2. Post from the journals to the general ledger, accounts receivable ledger, and accounts payable ledger accounts. Use account numbers as shown in the chapter.Screpcap Co. had the following transactions during the first week of June: June 1Purchased merchandise on account from Acme Supply, 2,700, plus freight charges of 160. 1Issued Check No. 219 to Denver Wholesalers for merchandise purchased on account, 720, less 1% discount. 1Sold merchandise on account to F. Colby, 246, plus 5% state sales tax plus 2% city sales tax. June 2Received cash on account from N. Dunlop, 315. 2Made cash sale of 413 plus 5% state sales tax plus 2% city sales tax. 2Purchased merchandise on account from Permon Co., 3,200, plus freight charges of 190. 3Sold merchandise on account to F. Ayres, 211, plus 5% state sales tax plus 2% city sales tax. 3Issued Check No. 220 to Ellis Co. for merchandise purchased on account, 847, less 1% discount. 3Received cash on account from F. Graves, 463. 4Issued Check No. 221 to Penguin Warehouse for merchandise purchased on account, 950, less 1% discount. 4Sold merchandise on account to K. Stanga, 318, plus 5% state sales tax plus 2% city sales tax. 4Purchased merchandise on account from Mason Milling, 1,630, plus freight charges of 90. 4Received cash on account from O. Alston, 381. 5Made cash sale of 319 plus 5% state sales tax plus 2% city sales tax. 5Issued Check No. 222 to Acme Supply for merchandise purchased on account, 980, less 1% discount. Required 1. Record the transactions in a general journal. 2. Assuming these are the types of transactions Screpcap Co. experiences on a regular basis, design the following special journals for Screpcap: (a) Sales journal (b) Cash receipts journal (c) Purchases journal (d) Cash payments journalAn overstatement of ending inventory in the year 20-1 will cause net income to be overstated in the year 20-1.An understatement of ending inventory in the year 20-1 will cause net income to be overstated in the year 20-2, assuming no other errors.LO2 Under the perpetual system of accounting for inventory, the current merchandise inventory and the cost of goods sold are not determined until the end of the accounting period when a physical inventory is taken.LO3 A fiscal year that starts and ends at the time the stock of goods is normally at its lowest level is known as a natural business year.LO3 If goods are shipped FOB shipping point, the seller pays for the shipping costs.An understatement of ending inventory in the year 20-1 will cause the owners equity account at the end of the year 20-2, assuming no other errors, to be (a) understated. (b) correctly stated. (c) overstated. (d) none of the above.2MCIn rimes of rising prices, the inventory cost method that will yield the lowest net income is (a) FIFO. (b) weighted-average. (c) LIFO. (d) none of the above.In rimes of rising prices, the inventory cost method that will yield the highest cost of goods sold is (a) LIFO. (b) weighted-average. (c) FIFO. (d) none of the above.In the application of lower-of-cost-or-market, market is the (a) lowest sales price. (b) highest sales price. (c) replacement cost. (d) average sales price.LO1 If the ending inventory is overstated by 10,000, indicate what, if anything, is incorrect about the following: Cost of goods sold___________ Gross profit___________ Net income___________ Ending owners capital___________Using the following information, compute the ending balance of the merchandise inventory account under the perpetual inventory system.Use the following information to compute cost of goods sold under the FIFO and LIFO inventory methods. The firm sold 200 units.Kulsrud Company would like to estimate the current inventory level. Using the gross profit method and the following information, estimate the current inventory level for Kulsrud Company. Goods available for sale 100,000 Net sales 150,000 Normal gross profit as a percent of sales 40%What financial statements are affected by an error in the ending inventory?What is the main difference between the periodic system of accounting for inventory and the perpetual system of accounting for inventory?Is a physical inventory necessary under the periodic system? Why or why not?Is a physical inventory necessary under the perpetual system? Why or why not?In a period of rising prices, which inventory method will result in: (a) the highest cost of goods sold? (b) the lowest cost of goods sold? (c) the highest ending inventory? (d) the lowest ending inventory? (e) the highest gross profit? (f) the lowest gross profit?What two factors are taken into account by the weighted-average method of merchandise cost allocation?Which inventory method always follows the actual physical flow of merchandise?When lower-of-cost-or-market is assigned to the items that comprise the ending merchandise inventory, what does cost mean? What does market mean?List the three steps followed under the gross profit method of estimating inventory.List the five steps followed under the retail method of estimating inventory.INVENTORY ERRORS Assume that in year 1, the ending merchandise inventory is overstated by 50,000. If this is the only error in years 1 and 2, indicate which items will be understated, overstated, or correctly stated for years 1 and 2.JOURNAL ENTRIESPERIODIC INVENTORY Paul Nasipak owns a business called Diamond Distributors. The following transactions took place during January of the current year. Journalize the transactions in a general journal using the periodic inventory method. Jan.5 Purchased merchandise on account from Prestigious Jewelers, 3,300. 8 Paid freight charge on merchandise purchased, 300. 12 Sold merchandise on account to Diamonds Unlimited, 4,500. 15 Received a credit memo from Prestigious Jewelers for merchandise returned, 700. 22 Issued a credit memo to Diamonds Unlimited for merchandise returned, 900.JOURNAL ENTRIESPERPETUAL INVENTORY Joan Ziemba owns a small variety store. The following transactions took place during March of the current year. Journalize the transactions in a general journal using the perpetual inventory method. Mar.3 Purchased merchandise on account from City Galleria, 2,900. 7 Paid freight charge on merchandise purchased, 225. 13 Sold merchandise on account to Amber Specialties, 3,400. The cost of the merchandise was 2,200. 18 Received a credit memo from City Galleria for merchandise returned, 650. 22 Issued a credit memo to Amber Specialties for merchandise returned, 600. The cost of the merchandise was 320.ENDING INVENTORY COSTS Sandy Chen owns a small specialty store, named Chens Chattel, whose year-end is June 30. Determine the total amount that should be included in Chens Chattels year-end inventory. A physical inventory taken on June 30 reveals the following: Cost of merchandise on the showroom floor and in the warehouse 43,600 Goods held on consignment (consignor is National Manufacturer) 6,400 Goods that Chens Chattel, as the consignor, has for sale at the location of the Grand Avenue Vista 4,400 Sales invoices indicate that merchandise was shipped on June 29, terms FOB shipping point, delivered at buyers receiving dock on July 3 3,800 Sales invoices indicate that merchandise was shipped on June 25, terms FOB destination, delivered at buyers receiving dock on July 5 4,000LOWER-OF-COST-OR-MARKET Stalberg Companys beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: There are 10 units of inventory on hand on December 31. 1. Calculate the total amount to be assigned to the ending inventory under each of the following periodic inventory methods: (a) FIFO (b) Weighted-average (round calculations to two decimal places) 2. Assume that the market price per unit (cost to replace) of Stalbergs inventory on December 31, 20--, was 26. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: (c) FIFO lower-of-cost-or-market (d) Weighted-average lower-of-cost-or-market 3. What journal entry would be made under lower-of-cost-or-market for parts 2(a) and (b) above?SPECIFIC IDENTIFICATION, FIFO, LIFO, AND WEIGHTED-AVERAGE Swing Companys beginning inventory and purchases during the fiscal year ended September 30, 20-2, were as follows: Use the following information for the specific identification method. There are 1,300 units of inventory on hand on September 30, 20-2. Of these 1,300 units: REQUIRED Calculate the total amount to be assigned to cost of goods sold for the fiscal year ended September 30, 20-2, and ending inventory on September 30, 20-2, under each of the following periodic inventory methods: 1. FIFO 2. LIFO 3. Weighted-average (round calculations to two decimal places) 4. Specific identificationCOST ALLOCATION AND LOWER-OF-COST-OR-MARKET Douglas Companys beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: There are 1,000 units of inventory on hand on December 31. REQUIRED 1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods: (a) FIFO (b) LIFO (c) Weighted-average (round calculations to two decimal places) 2. Assume that the market price per unit (cost to replace) of Douglass inventory on December 31 was 13. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-market 3. Prepare required entries to apply: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-market8SPARETAIL INVENTORY METHOD The following information is provided by Raynettes Pharmacy for the last quarter of its fiscal year ending on March 31, 20--: REQUIRED 1. Estimate the ending inventory as of March 31 using the retail inventory method. 2. Estimate the cost of goods sold for the time period January 1 through March 31 using the retail inventory method.INVENTORY ERRORS Assume that in year 1, the ending merchandise inventory is understated by 40,000. If this is the only error in years 1 and 2, indicate which items will be understated, overstated, or correctly stated for years 1 and 2.JOURNAL ENTRIESPERIODIC INVENTORY Amy Douglas owns a business called Douglas Distributors. The following transactions took place during January of the current year. Journalize the transactions in a general journal using the periodic inventory method. Jan. 5 Purchased merchandise on account from Elite Warehouse, 4,100. 8 Paid freight charge on merchandise purchased, 300. 12 Sold merchandise on account to Memories Unlimited, 5,200. 15 Received a credit memo from Elite Warehouse for merchandise returned, 700. 22 Issued a credit memo to Memories Unlimited for merchandise returned, 400.JOURNAL ENTRIESPERPETUAL INVENTORY Doreen Woods owns a small variety store. The following transactions took place during March of the current year. Journalize the transactions in a general journal using the perpetual inventory method. Mar. 3 Purchased merchandise on account from Corner Galleria, 3,500. 7 Paid freight charge on merchandise purchased, 200. 13 Sold merchandise on account to Sonya Specialties, 4,250. The cost of the merchandise was 2,550. 18 Received a credit memo from Corner Galleria for merchandise returned, 900. 22 Issued a credit memo to Sonya Specialties for merchandise returned, 500. The cost of the merchandise was 300.ENDING INVENTORY COSTS Danny Steele owns a small specialty store, named Steeles Storeroom, whose year-end is June 30. Determine the total amount that should be included in Steeles Storerooms year-end inventory. A physical inventory taken on June 30 reveals the following: Cost of merchandise on the showroom floor and in the warehouse 42,600 Goods held on consignment (consignor is Quality Manufacturer) 7,600 Goods that Steeles Storeroom, as the consignor, has for sale at the location of Midtown Galleria 8,300 Sales invoices indicate that merchandise was shipped on June 28, terms FOB shipping point, delivered at buyers receiving dock on July 6 4,350 Sales invoices indicate that merchandise was shipped on June 26, terms FOB destination, delivered at buyers receiving dock on July 1 2,800LOWER-OF-COST-OR-MARKET Bouie Companys beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: There are 20 units of inventory on hand on December 31. 1. Calculate the total amount to be assigned to the ending inventory under each of the following periodic inventory methods: (a) FIFO (b) Weighted-average (round calculations to two decimal places) 2. Assume that the market price per unit (cost to replace) of Bouies inventory on December 31, 20--, was 39. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-market 3. What journal entry would be made under lower-of-cost-or-market for parts 2(a) and (b) above?SPECIFIC IDENTIFICATION, FIFO, LIFO, AND WEIGHTED-AVERAGE Boyce Companys beginning inventory and purchases during the fiscal year ended September 30, 20-2, were as follows: Use the following information for the specific identification method. There are 900 units of inventory on hand on September 30, 20-2. Of these 900 units: REQUIRED Calculate the total amount to be assigned to the cost of goods sold for the fiscal year ended September 30, 20-2, and ending inventory on September 30, 20-2, under each of the following periodic inventory methods: 1. FIFO 2. LIFO 3. Weighted-average (round calculations to two decimal places) 4. Specific identificationCOST ALLOCATION AND LOWER-OF-COST-OR-MARKET Hall Companys beginning inventory and purchases during the fiscal year ended December 31, 20--, were as follows: There are 1,100 units of inventory on hand on December 31. REQUIRED 1. Calculate the total amount to be assigned to the ending inventory and cost of goods sold on December 31 under each of the following methods: (a) FIFO (b) LIFO (c) Weighted-average (round calculations to two decimal places) 2. Assume that the market price per unit (cost to replace) of Halls inventory on December 31 was 16. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-market 3. Prepare required entries to apply: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-marketGROSS PROFIT METHOD A flood completely destroyed all the inventory of Bayside Waterworks Company on July 1, 20. Fortunately, the accounting records were not destroyed in the flood. The following information is provided by Bayside Waterworks for the time period January 1 through July 1, 20--: REQUIRED Estimate the amount of merchandise inventory destroyed in the flood on July 1 using the gross profit method.RETAIL INVENTORY METHOD The following information is provided by Beverlys Basket Corner for the last quarter of its fiscal year ending on March 31, 20--: REQUIRED 1. Estimate the ending inventory as of March 31 using the retail inventory method. 2. Estimate the cost of goods sold for the time period January 1 through March 31 using the retail inventory method.Hurst Companys beginning inventory and purchases during the fiscal year ended December 31, 20-2, were as follows: There are 1,200 units of inventory on hand on December 31, 20-2. REQUIRED 1. Calculate the total amount to be assigned to the cost of goods sold for 20-2 and ending inventory on December 31 under each of the following periodic inventory methods: (a) FIFO (b) LIFO (c) Weighted-average (round calculations to two decimal places) 2. Assume that the market price per unit (cost to replace) of Hursts inventory on December 31 was 18. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-market 3. In addition to taking a physical inventory on December 31, Hurst decides to estimate the ending inventory and cost of goods sold. During the fiscal year ended December 31, 20-2, net sales of 100,000 were made at a normal gross profit rate of 35%. Use the gross profit method to estimate the cost of goods sold for the fiscal year ended December 31 and the inventory on December 31.Bhushan Company has been using LIFO for inventory purposes because it would prefer to keep gross profits low for tax purposes. In its second year of operation (20-2), the controller pointed out that this strategy did not appear to work and suggested that FIFO cost of goods sold would have been higher than LIFO cost of goods sold for 20-2. Is this possible? REQUIRED Using the information provided, compute the cost of goods sold for 20-1 and 20-2 comparing the LIFO and FIFO methods.Explain the primary difference between the periodic and perpetual inventory systems when calculating cost of goods sold and merchandise inventory.PERPETUAL: LIFO AND MOVING-AVERAGE The beginning inventory, purchases, and sales for Myrl Sign Company for the month of April follow. REQUIRED Calculate the total amount to be assigned to cost of goods sold for April and the ending inventory on April 30, under each of the following methods: 1. Perpetual LIFO inventory method. 2. Perpetual moving-average inventory method.PERPETUAL: LIFO AND MOVING-AVERAGE Kelley Company began business on January 1, 20-1. Purchases and sales during the month of January follow. REQUIRED Calculate the total amount to be assigned to cost of goods sold for January and the ending inventory on January 31, under each of the following methods: 1. Perpetual LIFO inventory method. 2. Perpetual moving-average inventory method.PERPETUAL: LIFO AND MOVING-AVERAGE The beginning inventory, purchases, and sales for Harrington Equipment Company for the month of August follow. BI: Beginning Inventory REQUIRED Calculate the total amount to be assigned to cost of goods sold for August and the ending inventory on August 31, under each of the following methods: 1. Perpetual LIFO inventory method. 2. Perpetual moving-average inventory method.SERIES B PROBLEM PERPETUAL: LIFO AND MOVING-AVERAGE Vozniak Company began business on January 1, 20-1. Purchases and sales during the month of January follow. REQUIRED Calculate the total amount to be assigned to cost of goods sold for January and the ending inventory on January 31, under each of the following methods: 1. Perpetual LIFO inventory method. 2. Perpetual moving-average inventory method.Under the periodic inventory system, the beginning inventory is removed from the merchandise inventory account with a credit to Merchandise Inventory and a debit to Income Summary.Under the periodic inventory system, the ending inventory is entered by debiting Merchandise Inventory and crediting Income Summary.The cash received in advance before delivering a product or performing a service is called unearned revenue.Unearned revenue is adjusted into an expense account at the end of the accounting period.Sales Returns and Allowances is classified as a contra-cost account on the income statement.Under the periodic inventory system, what account is credited when an estimate is made for sales made this year, but expected to be returned next year? (a) Merchandise Inventory (b) Customer Refunds Payable (c) Sales (d) Sales Returns and AllowancesUnder the periodic inventory system, what account is debited when an estimate is made for sales made this year, but expected to be returned next year? (a) Sales Returns and Allowances (b) Merchandise Inventory (c) Customer Refunds Payable (d) SalesUnder the periodic inventory system, what account is debited when an estimate is made for the cost of merchandise inventory sold this year, but expected to be returned next year? (a) Estimated Returns Inventory (b) Sales Returns and Allowances (c) Merchandise Inventory (d) Customer Refunds PayableUnearned revenue is classified as what type of account? (a) Asset (b) Liability (c) Owners Equity (d) Revenue (e) ExpenseUnder the perpetual inventory method, what account is credited when adjusting for the estimated cost of the merchandise sold this period, but expected to be returned next period? (a) Merchandise Inventory (b) Cost of Goods Sold (c) Customer Refunds Payable (d) Sales Returns and AllowancesPrepare the cost of goods sold section for Josephs Gift Shop. The following amounts are known: Beginning merchandise inventory 20,000 Ending merchandise inventory 15,000 Purchases 171,000The Venice Theatre sold and collected cash of 45,000 for season tickets. Upon collection of cash, Unearned Ticket Revenue was credited. At the end of the accounting period, 15,000 had been earned. Make the appropriate adjusting entry.Information relating to inventory for Janie Par Gifts is provided below. Beginning merchandise inventory 120,000 Ending merchandise inventory 90,000 Purchases 250,000 1. Set up a spreadsheet similar to the one provided below. 2. Enter the appropriate information from above into the Trial Balance columns. 3. Prepare appropriate adjustments and extensions to the Adjusted Trial Balance columns.Using the spreadsheet provided below, prepare the adjusting entries for merchandise inventory.5CEA firm is preparing to make adjusting entries at the end of the accounting period. The balance of the merchandise inventory account is 200,000. If the firm is using the periodic inventory system, what does this balance represent?What spreadsheet amounts are used to compute cost of goods sold?Why are both the debit and credit amounts in the Adjustments columns on the Income Summary line of the spreadsheet extended to the Adjusted Trial Balance columns?What is an unearned revenue?Give three examples of unearned revenue.6RQ7RQA firm is preparing to make adjusting entries at the end of the accounting period. The balance of the merchandise inventory account is 100,000. If the firm is using the perpetual inventory system, what does this balance represent?ADJUSTMENT FOR MERCHANDISE INVENTORY USING T ACCOUNTS: PERIODIC INVENTORY SYSTEM Ibby Smith owns and operates Ibbys Ice Cream Cones. Her beginning inventory as of January 1, 20--, was 45,000, and her ending inventory as of December 31, 20--, was 57,000. Set up T accounts for Merchandise Inventory and Income Summary and perform the year-end adjustment for Merchandise Inventory.ADJUSTMENT FOR MERCHANDISE INVENTORY USING T ACCOUNTS: PERIODIC INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES Sam Edwards owns a business called Sams Stuff. A physical count determined his ending inventory as of December 31, 20-- was 72,000. Based on past experience, Sam estimates that 5,000 of sales from this year will be returned next year. The cost of the merchandise expected to be returned is 3,000. Using the partial Trial Balance provided below, set up T accounts for Merchandise Inventory, Estimated Returns Inventory, Customer Refunds Payable, Sales Returns and Allowances, and Income Summary and prepare the year-end adjustments for Merchandise Inventory and related accounts.CALCULATION OF COST OF GOODS SOLD: PERIODIC INVENTORY SYSTEM Prepare the cost of goods sold section for Adams Gift Shop. The following amounts are known: Beginning merchandise inventory 27,000 Ending merchandise inventory 22,000 Purchases 78,000 Purchases returns and allowances 3,900 Purchases discounts 6,000 Freight-in 350CALCULATION OF COST OF GOODS SOLD: PERIODIC INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES Use the same information as provided in Exercise 14-3A, but assume the business makes estimates for sales returns and allowances at year-end. The balances for estimated returns inventory are provided below. Prepare the cost of goods sold section of the income statement. Beginning estimated returns inventory 2,000 Ending estimated returns inventory 1,600ADJUSTMENT FOR UNEARNED REVENUES USING T ACCOUNTS Set up T accounts for Cash, Unearned Ticket Revenue, and Ticket Revenue. Post the following two transactions to the appropriate accounts, indicating each transaction by letter: (a) Sold 1,200 season tickets at 400 each, receiving cash of 480,000. (b) An end-of-period adjustment is needed to recognize that 120,000 in ticket revenue has been earned.MERCHANDISE INVENTORY ADJUSTMENTS: PERIODIC INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES Use the information provided below to prepare a partial end-of-period spreadsheet for Karens Gift Shop for the year ended December 31, 20--. The ending merchandise inventory is 60,000. Karen estimates that customers will be granted 15,000 in refunds next year for merchandise sold this year. The estimated cost of the returned inventory is 10,000. 1. Complete the Adjustments columns for Merchandise Inventory and related accounts. 2. Extend all accounts to the Adjusted Trial Balance columns. 3. Prepare the cost of goods sold section from the spreadsheet.DETERMINING THE BEGINNING AND ENDING INVENTORY FROM A PARTIAL SPREADSHEET: PERIODIC INVENTORY SYSTEM From the following partial spreadsheet, indicate the dollar amount of beginning and ending merchandise inventory to be used to compute cost of goods sold.JOURNALIZE ADJUSTING ENTRIES FOR A MERCHANDISING BUSINESS The following partial spreadsheet is taken from the books of Vinnies Vegetable Market, for the year ended December 31, 20--. Journalize the adjustments in a general journal.JOURNAL ENTRIES UNDER THE PERPETUAL INVENTORY SYSTEM Bhushan Building Supplies entered into the following transactions. Prepare journal entries under the perpetual inventory system. June1 Purchased merchandise on account from Brij Builders Materials,500,000. 3 Purchased merchandise for cash, 400,000. 5 Sold merchandise on account to Champa Construction for 20,000. The merchandise cost 15,000.ADJUSTMENTS FOR A MERCHANDISING BUSINESS: PERPETUAL INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES A partial Trial Balance for Curless Company as of December 31, 20-- is provided below. Curless has made the following estimates for next year: 1. Sales made this year of 7,800 will be returned next year and customers will be granted full refunds. 2. The estimated cost of the inventory sold this year and expected to be returned by customers next year is 5,900. Open T accounts and enter the balances for the above accounts. Make appropriate adjustments to the T accounts.JOURNALIZE ADJUSTING ENTRY FOR INVENTORY SHRINKAGE: PERPETUAL INVENTORY SYSTEM On December 31, Anup Enterprises completed a physical count of its inventory. Although the merchandise inventory account shows a balance of 350,000, the physical count comes to 325,000. Prepare the appropriate adjusting entry under the perpetual inventory system.PREPARATION OF ADJUSTMENTS ON A SPREADSHEET FOR A MERCHANDISING BUSINESS: PERIODIC METHOD The trial balance for the Venice Beach Kite Shop, a business owned by Molly Young is shown on page 552. Year-end adjustment information is as follows: REQUIRED 1. Complete the Adjustments columns, identifying each adjustment with its corresponding letter. 2. Complete the spreadsheet. 3. Filter the adjustments in a general journal.WORKING BACKWARD FROM ADJUSTED TRIAL BALANCE TO DETERMINE ADJUSTING ENTRIES The partial spreadsheet shown below is taken from the books of Sunstate Computer Supply, a business owned by Michelle Thibeault, for the year ended December 31, 20--. Sunstate is on the periodic inventory system. REQUIRED 1. Determine the adjusting entries by analyzing the difference between the adjusted trial balance and the trial balance. 2. Journalize the adjusting entries in a general journal.ADJUSTMENT FOR MERCHANDISE INVENTORY USING T ACCOUNTS: PERIODIC INVENTORY SYSTEM Doran May owns and operates the Chocolate Moose Ice Cream stand. His beginning inventory as of January 1, 20--, was 33,000, and his ending inventory as of December 31, 20--, was 36,000. Set up T accounts for Merchandise Inventory and Income Summary and perform the year-end adjustment for Merchandise Inventory.ADJUSTMENT FOR MERCHANDISE INVENTORY USING T ACCOUNTS: PERIODIC INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES Ronica Kluge owns a business called Ronis Rummage. A physical count determined the ending inventory as of December 31, 20-- was 80,000. Based on past experience, Roni estimates that 6,000 of sales from this year will be refunded next year. The cost of the merchandise expected to be returned is 4,000. Using the partial Trial Balance provided below, set up T accounts for Merchandise Inventory, Estimated Returns Inventory, Customer Refunds Payable, Sales Returns and Allowances, and Income Summary and prepare the year-end adjustments for Merchandise Inventory and related accounts.CALCULATION OF COST OF GOODS SOLD: PERIODIC INVENTORY SYSTEM Prepare the cost of goods sold section for Havens Gift Shop. The following amounts are known: Beginning merchandise inventory 29,000 Ending merchandise inventory 27,000 Purchases 62,000 Purchases returns and allowances 2,800 Purchases discounts 3,400 Freight-in 300CALCULATION OF COST OF GOODS SOLD: PERIODIC INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES Use the same information as provided in Exercise 14-3B, but assume the business makes estimates for sales returns and allowances at year end. The balances for estimated returns inventory are provided below. Prepare the cost of goods sold section of the income statement. Beginning estimated returns inventory 2,600 Ending estimated returns inventory 3,500ADJUSTMENT FOR UNEARNED REVENUES USING T ACCOUNTS Set up T accounts for Cash, Unearned Ticket Revenue, and Ticket Revenue. Post the following two transactions to the appropriate accounts, indicating each transaction by letter: (a) Sold 1,200 season tickets at 20 each, receiving cash of 24,000. (b) An end-of-period adjustment is needed to recognize that 19,000 in ticket revenue has been earned.MERCHANDISE INVENTORY ADJUSTMENTS: PERIODIC INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES Use the information provided below to prepare a partial end-of-period spreadsheet for Nicks Gift Shop for the year ended December 31, 20--. The ending merchandise inventory is 45,000. Nick estimates that customers will be granted 5,500, in refunds next year for merchandise sold this year. The estimated cost of the returned inventory is 3,500. 1. Complete the Adjustments columns for Merchandise Inventory and related accounts. 2. Extend all accounts to the Adjusted Trial Balance columns. 3. Prepare the cost of goods sold section from the spreadsheet.DETERMINING THE BEGINNING AND ENDING INVENTORY FROM A PARTIAL SPREADSHEET: PERIODIC INVENTORY SYSTEM From the following partial spreadsheet, indicate the dollar amount of beginning and ending merchandise inventory to be used to compute cost of goods sold.JOURNALIZE ADJUSTING ENTRIES FOR A MERCHANDISING BUSINESS The following partial spreadsheet is taken from the books of the Venice Vegetable Market, for the year ended December 31, 20--. Journalize the adjustments in a general journal.JOURNAL ENTRIES UNDER THE PERPETUAL INVENTORY SYSTEM Sunita Computer Supplies entered into the following transactions. Prepare journal entries under the perpetual inventory system. May 1 Purchased merchandise on account from Anju Enterprises, 200,000. 8 Purchased merchandise for cash, 100,000. 15 Sold merchandise on account to Salils Pharmacy for 8,000. The merchandise cost 5,000.ADJUSTMENTS FOR A MERCHANDISING BUSINESS: PERPETUAL INVENTORY SYSTEM WITH SALES RETURNS AND ALLOWANCES A partial Trial Balance for Coleman Company as of December 31, 20-- is provided below. Coleman has made the following estimates for next year: 1. Sales made this year of 8,800 will be returned next year and customers will be granted full refunds. 2. The estimated cost of the inventory sold this year and expected to be returned by customers next year is 6,400. Open T accounts and enter the balances for the above accounts. Make appropriate adjustments to the T accounts.JOURNALIZE ADJUSTING ENTRY FOR INVENTORY SHRINKAGE: PERPETUAL INVENTORY SYSTEM On December 31, Anup Enterprises completed a physical count of its inventory. Although the merchandise inventory account shows a balance of 200,000, the physical count comes to 210,000. Prepare the appropriate adjusting entry under the perpetual inventory system.12SPBWORKING BACKWARD FROM ADJUSTED TRIAL BALANCE TO DETERMINE ADJUSTING ENTRIES The partial spreadsheet shown below is taken from the books of Albers Pet Supply, a business owned by Carm Albers, for the year ended December 31, 20--. Albers is on the periodic inventory system. REQUIRED 1. Determine the adjusting entries by analyzing the difference between the adjusted trial balance and the trial balance. 2. Journalize the adjusting entries in a general journal.A friend of yours recently opened Abracadabra, a sportswear shop specializing in monogrammed athletic gear. Most merchandise is special ordered for customers. However, a small inventory is on hand. Your friend does not understand why a physical inventory is necessary before preparing the financial statements. She knows how much she paid for all merchandise purchased. Why not simply use this amount for cost of goods sold? After all, it has been paid for. Write a brief memo explaining the purpose of the physical inventory and why she should not use the cost of purchases as cost of goods sold.Jason Tierro, an inventory clerk at Lexmar Company, is responsible for taking a physical count of the goods on hand at the end of the year. He has been performing this duty for several years. This year, Jason was very busy due to a shortage of personnel at the company, so he decided to just estimate the amount of ending inventory instead of doing an accurate count. He reasoned that he could come very close to the true amount because of his past experience working with inventory. Besides, he was sure that the sophisticated computer program that Lexmar had just invested in kept an accurate record of inventory on hand. 1. What is your opinion of Jasons reasoning? 2. If Jason underestimates the dollar amount of ending inventory, what effect will it have on net income for the current accounting period? 3. Write a short paragraph explaining why a physical inventory should be taken at least once a year. 4. In groups of three or four, make a list of possible reasons that the actual ending inventory might not agree with the ending inventory according to a computer system.John Neff owns and operates Waikiki Surf Shop. A year-end trial balance is provided on page 561. Year-end adjustment data for the Waikiki Surf Shop are shown below. Neff uses the periodic inventory system. Year-end adjustment data are as follows: (a, b)A physical count shows that merchandise inventory costing 51,800 is on hand as of December 31, 20--. (c, d, e)Neff estimates that customers will be granted 2,000 in refunds of this years sales next year and the merchandise expected to be returned will have a cost of 1,200. (f)Supplies remaining at the end of the year, 600. (g)Unexpired insurance on December 31, 2,600. (h)Depreciation expense on the building for 20--, 5,000. (i)Depreciation expense on the store equipment for 20--, 3,000. (j)Wages earned but not paid as of December 31, 1,800. (k)Neff also offers boat rentals which clients pay for in advance. Unearned boat rental revenue as of December 31 is 3,000. Required 1. Prepare a year-end spreadsheet. 2. Journalize the adjusting entries. 3. Compute cost of goods sold using the spreadsheet prepared for part (1).Block Foods, a retail grocery store, has agreed to purchase all of its merchandise from Square Wholesalers. In return. Block receives a special discount on purchases. Over recent months, Square noticed that purchases by Block had been falling off. At first, Square simply thought that business might be down for Block and was hopeful that their purchases would pick up. When business with Block did not return to a normal level, Square requested financial statements from Block. Squares records indicate that Block purchased 300,000 worth of merchandise during 20-1, the most recent year. Selected information taken from Block's financial statements is as follows: REQUIRED Compute net purchases made by Block during 20-1. Does it appear that Block violated the agreement?EXPENSE METHOD OF ACCOUNTING FOR PREPAID EXPENSES Davidsons Food Mart paid 1,200 in advance to the local newspaper for advertisements that will appear monthly. The following entry was made: At the end of the year, December 31, 20--, Davidson received notification that advertisements costing 800 had been run. Prepare the adjusting entry.EXPENSE METHOD OF ACCOUNTING FOR PREPAID EXPENSES Ryans Fish House purchased supplies costing 3,000 for cash. This amount was debited to the supplies expense account. At the end of the year, December 31, 20--, an inventory showed that supplies costing 500 remained. Prepare the adjusting entry.LO1 A multiple-step form of income statement calculates gross profit, before subtracting operating expenses.2TF3TF4TFLO4 Accounts receivable turnover is the number of times merchandise inventory turned over or was sold during the accounting period.1MC2MC3MC4MC5MC1CE2CE3CE4CE5CE6CE1RQ2RQDescribe how to calculate the following ratios (a) Return on owners equity (b) Accounts receivable turnover (c) Inventory turnoverWhere is the information obtained that is needed in journalizing the closing entries?Explain the function of each of the four closing entries made by Sunflower Cycle.What is the purpose of a post-closing trial balance?What is the primary purpose of reversing entries?What is the customary date for reversing entries?What adjusting entries should be reversed?REVENUE SECTION. MULTIPLE-STEP INCOME STATEMENT Based on the information that follows, prepare the revenue section of a multiple-step income statement.COST OF GOODS SOLD SECTION, MULTIPLE-STEP INCOME STATEMENT Based on the information that follows, prepare the cost of goods sold section of a multiple-step income statement.MULTIPLE-STEP INCOME STATEMENT Use the following information to prepare a multiple-step income statement, including the revenue section and the cost of goods sold section, for Sauter Office Supplies for the year ended December 31, 20--.FINANCIAL RATIOS Based on the financial statements for Jackson Enterprises (income statement, statement of owners equity, and balance sheet) shown on pages 596597, prepare the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was 21,600. 1. Working capital 2. Current ratio 3. Quick ratio 4. Return on owners equity 5. Accounts receivable turnover and average number of days required to collect receivables 6. Inventory turnover and average number of days required to sell inventoryCLOSING ENTRIES Using the spreadsheet and partially completed Income Summary Account on page 598, prepare the following: 1. Closing entries for Gimbels Gifts and Gadgets in a general journal. 2. A post-closing trial balance. EXERCISE 15-5AREVERSING ENTRIES From the spreadsheet used in Exercise 15-5A, identify the adjusting entry(ies) that should be reversed and prepare the reversing entry(ies).ADJUSTING, CLOSING, AND REVERSING ENTRIES Prepare entries for (a), (b), and (c) listed below using two methods. First, prepare the entries without making a reversing entry. Second, prepare the entries with the use of a reversing entry. Use T-accounts to assist your analysis. (a) Wages paid during 20-1 are 20,800. (b) Wages earned but not paid (accrued) as of December 31, 20-1, are 300. (c) On January 3, 20-2, payroll of 800 is paid, which includes the 300 of wages earned but not paid in December.INCOME STATEMENT, STATEMENT OF OWNERS EQUITY, AND BALANCE SHEET Paulsons Pet Store completed the Adjusted Trial Balance on page 600 for the year ended December 31, 20--. Owners equity as of January 1, 20--, was 504,320. The current portion of Note Payable is 2,000. REQUIRED 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet. PROBLEM 15-8AFINANCIAL RATIOS Use the spreadsheet and financial statements prepared in Problem 15-8A. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was 10,200. REQUIRED Prepare the following financial ratios: (a) Current ratio (b) Quick ratio (c) Working capital (d) Return on owners equity (e) Accounts receivable turnover and average number of days required to collect receivables (f) Inventory turnover and average number of days required to sell inventoryEND-OF-PERIOD SPREADSHEET, ADJUSTING, CLOSING, AND REVERSING ENTRIES Vickis Fabric Store shows the trial balance on page 601 as of December 31, 20-1. At the end of the year, the following adjustments need to be made: (a, b)Merchandise inventory as of December 31, 31,600. (c, d, e)Vicki estimates that customers will be granted 2,500 in refunds of this years sales next year and the merchandise expected to be returned will have a cost of 1,800. (f)Unused supplies on hand, 350. (g)Insurance expired, 2,400. (h)Depreciation expense for the year on building, 20,000. (i)Depreciation expense for the year on equipment, 4,000. (j)Wages earned but not paid (Wages Payable), 520. (k)Unearned revenue on December 31, 20-1, 1,200. PROBLEM 15-10A CONT. REQUIRED 1. Prepare an end-of-period spreadsheet. 2. Prepare adjusting entries and post adjusting entries to an Income Summary T account. 3. Prepare closing entries and post to a Capital T account. There were no additional investments this year. 4. Prepare a post-closing trial balance. 5. Prepare reversing entry(ies).REVENUE SECTION, MULTIPLE-STEP INCOME STATEMENT Based on the information that follows, prepare the revenue section of a multiple-step income statement.COST OF GOODS SOLD SECTION, MULTIPLE-STEP INCOME STATEMENT Based on the information that follows, prepare the cost of goods sold section of a multiple-step income statement.MULTIPLE-STEP INCOME STATEMENT Use the following information to prepare a multiple-step income statement, including the revenue section and the cost of goods sold section, for Aeitos Plumbing Supplies for the year ended December 31, 20--.FINANCIAL RATIOS Based on the financial statements, shown on pages 603604, for McDonald Carpeting Co. (income statement, statement of owners equity, and balance sheet), prepare the following financial ratios. All sales are credit sales. The balance of Accounts Receivable on January 1, 20--, was 6,800. 1. Working capital 2. Current ratio 3. Quick ratio 4. Return on owners equity 5. Accounts receivable turnover and average number of days required to collect receivables 6. Inventory turnover and average number of days required to sell inventoryCLOSING ENTRIES Using the spreadsheet and partially completed Income Summary Account on page 605 prepare the following: 1. Closing entries for Balloons and Baubbles in a general journal. 2. A post-closing trial balance. EXERCISE 15-5B6SEB7SEBINCOME STATEMENT, STATEMENT OF OWNERS EQUITY, AND BALANCE SHEET Backlund Farm Supply completed the Adjusted Trial Balance on page 607 for the year ended December 31, 20--. Owners equity as of January 1, 20--, was 507,752. The current portion of Note Payable is 3,000. REQUIRED 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet. PROBLEM 15-8BFINANCIAL RATIOS Use the work sheet and financial statements prepared in Problem 15-8B. All sales are credit sales. The Accounts Receivable balance on January 1 was 38,200. REQUIRED Prepare the following financial ratios: (a) Working capital (b) Current ratio (c) Quick ratio (d) Return on owners equity (e) Accounts receivable turnover and the average number of days required to collect receivables (f) Inventory turnover and the average number of days required to sell inventoryEND-OF-PERIOD SPREADSHEET, ADJUSTING, CLOSING, AND REVERSING ENTRIES The trial balance for Danbury Kite Shop as of December 31, 20-1, is shown on page 608. At the end of the year, the following adjustments need to be made: (a, b)Merchandise inventory as of December 31, 37,920. (c, d, e)Bill Danbury estimates that customers will be granted 3,000 in refunds of this years sales next year and the merchandise expected to be returned will have a cost of 2,160. (f)Unused supplies on hand, 420. (g)Insurance expired, 2,880. (h)Depreciation expense for the year on building, 24,000. (i)Depreciation expense for the year on equipment, 4,800. (j)Wages earned but not paid (Wages Payable), 624. (k)Unearned repair revenue on December 31, 20-1, 1,440. REQUIRED 1. Prepare an end-of-period spreadsheet. 2. Prepare adjusting entries and post adjusting entries to an Income Summary T account. 3. Prepare closing entries and post to a Capital T account. There were no additional investments this year. 4. Prepare a post-closing trial balance. 5. Prepare reversing entry(ies). PROBLEM 15-10B1MYWDominique Fouque owns and operates Dominiques Doll House. She has a small shop in which she sells new and antique dolls. She is particularly well known for her collection of antique Ken and Barbie dolls. A completed spreadsheet for 20-3 is shown on page 610. Fouque made no additional investments during the year and the long-term note payable is due in 20-9. No portion of the long-term note is due within the next year. Net credit sales for 20-3 were 38,000, and receivables on January 1 were 3,000. REQUIRED 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet. 4. Compute the following measures of performance and financial condition for 20-3: (a) Current ratio (b) Quick ratio (c) Working capital (d) Return on owners equity (e) Accounts receivable turnover and average number of days required to collect receivables (f) Inventory turnover and the average number of days required to sell inventory 5. Prepare adjusting entries and indicate which should be reversed and why. 6. Open an Income Summary account. Post adjusting and closing entries (prepared in 7) to this account. 7. Prepare closing entries. 8. Prepare reversing entries for the adjustments where appropriate.1CPComprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: For those not using working papers: 1. If you are not using the working papers, open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 16. Enter the December 16 balance of each of the accounts, with a check mark in the Posting Reference column. For working paper users and nonusers:Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8.Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: 2. Enter transactions for the second half of December in the general journal. Post immediately to the accounts receivable and accounts payable ledgers.Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: 3. Post from the journal to the general ledger.Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: 4. Prepare schedules of accounts receivable and accounts payable.Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: 5. Prepare a year-end spreadsheet, an income statement, a statement of owners equity, and a balance sheet. The mortgage payable includes 600 that is due within one year.Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: 6. Journalize and post adjusting entries.Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: 7. Journalize and post closing entries. (Hint: Close all expense and revenue account balances. Then, close Income Summary and Tom Jones, Drawing to Tom Jones, Capital.)Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: 8. Prepare a post-closing trial balance.Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 1 During the second half of December 20-1, TJs Specialty Shop engaged in the following transactions: CengageNowv2 provides Show Me How videos for selected exercises and problems. Additional resources, such as Excel templates for completing selected exercises and problems, are available for download from the companion website at Cengage.com. Dec. 16 Received payment from Lucy Greene on account, 1,960. 16 Sold merchandise on account to Kim Fields, 160, plus sales tax of 8. Sale No. 640. 17 Returned merchandise to Evans Essentials for credit, 150. 18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of 1,250, less the credit received on December 17. 19 Sold merchandise on account to Lucy Greene, 620, plus tax of 31. Sale No. 641. 22 Received payment from John Dempsey on account, 1,560. 23 Issued Check No. 814 for the purchase of supplies, 120. (Debit Supplies) 24 Purchased merchandise on account from West Wholesalers, 1,200. Invoice No. 465, dated December 24, terms n/30. 26 Purchased merchandise on account from Nathen Co., 800. Invoice No. 817, dated December 26, terms 2/10, n/30. 27 Issued Check No. 815 to KC Power Light (Utilities Expense) for the month of December, 630. 27 Sold merchandise on account to John Dempsey, 2,020, plus tax of 101. Sale No. 642. 29 Received payment from Martha Boyle on account, 2,473. 29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, 1,100. 30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, 200. As of December 16, TJs account balances were as follows: TJs also had the following subsidiary ledger balances as of December 16: 9. Journalize and post reversing entries for the adjustments where appropriate, as of January 1, 20-2.2.1COPComprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 2 During the month of January 20-2, TJs Specialty Shop engaged in the following transactions: Jan. 1 Sold merchandise on account to Anne Clark, 3,000, plus tax of 150. Sale No. 643. 2 Issued Check No. 818 to Nathen Co. in payment of January 1 balance of 800, less 2% discount. Jan. 3 Purchased merchandise on account from West Wholesalers, 1,500. Invoice No. 678, dated January 3, terms 2/15, n/30. 4 Purchased merchandise on account from Owen Enterprises, 2,000. Invoice No. 767, dated January 4, terms 2/10, n/30. 4 Issued Check No. 819 in payment of phone expense for the month of January, 180. 8 Sold merchandise for cash, 3,600, plus tax of 180. 9 Received payment from Lucy Greene in full settlement of account, 1,491. 10 Issued Check No. 820 to West Wholesalers in payment of January 1 balance of 1,200. 12 Sold merchandise on account to Martha Boyle, 1,000, plus tax of 50. Sale No. 644. 12 Received payment from Anne Clark on account, 2,100. 12 Issued Check No. 821 in payment of wages (Wages Expense) for the two-week period ending January 11, 1,100. 13 Issued Check No. 822 to Owen Enterprises in payment of January 4 purchase. Invoice No. 767, less 2% discount. 13 Martha Boyle returned merchandise for a credit, 800, plus sales tax of 40. 17 Returned merchandise to Evans Essentials for credit, 300. 22 Received payment from John Dempsey on account, 2,121. 26 Issued Check No. 823 in payment of wages (Wages Expense) for the two-week period ending January 25, 1,100. 27 Issued Check No. 824 to KC Power Light (Utilities Expense) for the month of January, 630. 27 Sold merchandise on account to John Dempsey, 2,000, plus tax of 100. Sale No. 645. Late in January, TJs agreed to sell the business to a competitor. To agree on a selling price, financial statements are needed as of January 31 and for the month of January 20-2. To prepare these financial statements, TJs must perform the same procedures it normally does at year-end. At the end of January, the following adjustments (a)(j) need to be made: (a, b) Merchandise inventory as of January 31, 19,000. (c, d, e) Jones estimates that customers will be granted 500 in refunds of this months sales in subsequent months, and the merchandise expected to be returned will have a cost of 360. (f) Unused supplies on hand, 115. (g) Unexpired insurance on January 31, 968. (h) Depreciation expense on the building for the month, 67. (i) Depreciation expense on the store equipment for the month, 38. (j) Wages earned but not paid as of January 31, 330. 2. Enter transactions for the month of January in the general journal. Post immediately to the accounts receivable and accounts payable ledgers.Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 2 During the month of January 20-2, TJs Specialty Shop engaged in the following transactions: Jan. 1 Sold merchandise on account to Anne Clark, 3,000, plus tax of 150. Sale No. 643. 2 Issued Check No. 818 to Nathen Co. in payment of January 1 balance of 800, less 2% discount. Jan. 3 Purchased merchandise on account from West Wholesalers, 1,500. Invoice No. 678, dated January 3, terms 2/15, n/30. 4 Purchased merchandise on account from Owen Enterprises, 2,000. Invoice No. 767, dated January 4, terms 2/10, n/30. 4 Issued Check No. 819 in payment of phone expense for the month of January, 180. 8 Sold merchandise for cash, 3,600, plus tax of 180. 9 Received payment from Lucy Greene in full settlement of account, 1,491. 10 Issued Check No. 820 to West Wholesalers in payment of January 1 balance of 1,200. 12 Sold merchandise on account to Martha Boyle, 1,000, plus tax of 50. Sale No. 644. 12 Received payment from Anne Clark on account, 2,100. 12 Issued Check No. 821 in payment of wages (Wages Expense) for the two-week period ending January 11, 1,100. 13 Issued Check No. 822 to Owen Enterprises in payment of January 4 purchase. Invoice No. 767, less 2% discount. 13 Martha Boyle returned merchandise for a credit, 800, plus sales tax of 40. 17 Returned merchandise to Evans Essentials for credit, 300. 22 Received payment from John Dempsey on account, 2,121. 26 Issued Check No. 823 in payment of wages (Wages Expense) for the two-week period ending January 25, 1,100. 27 Issued Check No. 824 to KC Power Light (Utilities Expense) for the month of January, 630. 27 Sold merchandise on account to John Dempsey, 2,000, plus tax of 100. Sale No. 645. Late in January, TJs agreed to sell the business to a competitor. To agree on a selling price, financial statements are needed as of January 31 and for the month of January 20-2. To prepare these financial statements, TJs must perform the same procedures it normally does at year-end. At the end of January, the following adjustments (a)(j) need to be made: (a, b) Merchandise inventory as of January 31, 19,000. (c, d, e) Jones estimates that customers will be granted 500 in refunds of this months sales in subsequent months, and the merchandise expected to be returned will have a cost of 360. (f) Unused supplies on hand, 115. (g) Unexpired insurance on January 31, 968. (h) Depreciation expense on the building for the month, 67. (i) Depreciation expense on the store equipment for the month, 38. (j) Wages earned but not paid as of January 31, 330. 3. Post from the journal to the general ledger.2.4COP2.5COPComprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 2 During the month of January 20-2, TJs Specialty Shop engaged in the following transactions: Jan. 1 Sold merchandise on account to Anne Clark, 3,000, plus tax of 150. Sale No. 643. 2 Issued Check No. 818 to Nathen Co. in payment of January 1 balance of 800, less 2% discount. Jan. 3 Purchased merchandise on account from West Wholesalers, 1,500. Invoice No. 678, dated January 3, terms 2/15, n/30. 4 Purchased merchandise on account from Owen Enterprises, 2,000. Invoice No. 767, dated January 4, terms 2/10, n/30. 4 Issued Check No. 819 in payment of phone expense for the month of January, 180. 8 Sold merchandise for cash, 3,600, plus tax of 180. 9 Received payment from Lucy Greene in full settlement of account, 1,491. 10 Issued Check No. 820 to West Wholesalers in payment of January 1 balance of 1,200. 12 Sold merchandise on account to Martha Boyle, 1,000, plus tax of 50. Sale No. 644. 12 Received payment from Anne Clark on account, 2,100. 12 Issued Check No. 821 in payment of wages (Wages Expense) for the two-week period ending January 11, 1,100. 13 Issued Check No. 822 to Owen Enterprises in payment of January 4 purchase. Invoice No. 767, less 2% discount. 13 Martha Boyle returned merchandise for a credit, 800, plus sales tax of 40. 17 Returned merchandise to Evans Essentials for credit, 300. 22 Received payment from John Dempsey on account, 2,121. 26 Issued Check No. 823 in payment of wages (Wages Expense) for the two-week period ending January 25, 1,100. 27 Issued Check No. 824 to KC Power Light (Utilities Expense) for the month of January, 630. 27 Sold merchandise on account to John Dempsey, 2,000, plus tax of 100. Sale No. 645. Late in January, TJs agreed to sell the business to a competitor. To agree on a selling price, financial statements are needed as of January 31 and for the month of January 20-2. To prepare these financial statements, TJs must perform the same procedures it normally does at year-end. At the end of January, the following adjustments (a)(j) need to be made: (a, b) Merchandise inventory as of January 31, 19,000. (c, d, e) Jones estimates that customers will be granted 500 in refunds of this months sales in subsequent months, and the merchandise expected to be returned will have a cost of 360. (f) Unused supplies on hand, 115. (g) Unexpired insurance on January 31, 968. (h) Depreciation expense on the building for the month, 67. (i) Depreciation expense on the store equipment for the month, 38. (j) Wages earned but not paid as of January 31, 330. 6. Journalize and post adjusting entries.Comprehensive Problem 2: Accounting Cycle with Subsidiary Ledgers, Part 2 During the month of January 20-2, TJs Specialty Shop engaged in the following transactions: Jan. 1 Sold merchandise on account to Anne Clark, 3,000, plus tax of 150. Sale No. 643. 2 Issued Check No. 818 to Nathen Co. in payment of January 1 balance of 800, less 2% discount. Jan. 3 Purchased merchandise on account from West Wholesalers, 1,500. Invoice No. 678, dated January 3, terms 2/15, n/30. 4 Purchased merchandise on account from Owen Enterprises, 2,000. Invoice No. 767, dated January 4, terms 2/10, n/30. 4 Issued Check No. 819 in payment of phone expense for the month of January, 180. 8 Sold merchandise for cash, 3,600, plus tax of 180. 9 Received payment from Lucy Greene in full settlement of account, 1,491. 10 Issued Check No. 820 to West Wholesalers in payment of January 1 balance of 1,200. 12 Sold merchandise on account to Martha Boyle, 1,000, plus tax of 50. Sale No. 644. 12 Received payment from Anne Clark on account, 2,100. 12 Issued Check No. 821 in payment of wages (Wages Expense) for the two-week period ending January 11, 1,100. 13 Issued Check No. 822 to Owen Enterprises in payment of January 4 purchase. Invoice No. 767, less 2% discount. 13 Martha Boyle returned merchandise for a credit, 800, plus sales tax of 40. 17 Returned merchandise to Evans Essentials for credit, 300. 22 Received payment from John Dempsey on account, 2,121. 26 Issued Check No. 823 in payment of wages (Wages Expense) for the two-week period ending January 25, 1,100. 27 Issued Check No. 824 to KC Power Light (Utilities Expense) for the month of January, 630. 27 Sold merchandise on account to John Dempsey, 2,000, plus tax of 100. Sale No. 645. Late in January, TJs agreed to sell the business to a competitor. To agree on a selling price, financial statements are needed as of January 31 and for the month of January 20-2. To prepare these financial statements, TJs must perform the same procedures it normally does at year-end. At the end of January, the following adjustments (a)(j) need to be made: (a, b) Merchandise inventory as of January 31, 19,000. (c, d, e) Jones estimates that customers will be granted 500 in refunds of this months sales in subsequent months, and the merchandise expected to be returned will have a cost of 360. (f) Unused supplies on hand, 115. (g) Unexpired insurance on January 31, 968. (h) Depreciation expense on the building for the month, 67. (i) Depreciation expense on the store equipment for the month, 38. (j) Wages earned but not paid as of January 31, 330. 7. Journalize and post closing entries. (Hint: Close all expense and revenue account balances. Then close Income Summary and Tom Jones, Drawing to Tom Jones, Capital.)2.8COPThere are two methods of accounting for uncollectible accounts: the allowance method and the direct write-off method.The matching principle states that debits should be matched with credits.Using the percentage of sales method, the balance in Allowance for Doubtful Accounts must be taken into consideration before making the adjusting entry.When an account is written off under the allowance method, there should be a debit to Bad Debt Expense.Each time an account is written off under the direct write-off method, Bad Debt Expense is debited.The dollar difference between Accounts Receivable and Allowance for Doubtful Accounts is called (a) book value. (b) interest value. (c) carrying value. (d) net realizable value.A business has an ending balance in Accounts Receivable of 35,000; credit sales for the year of 300,000; and a credit balance in Allowance for Doubtful Accounts of 800. If the percentage of sales method is used and the percentage is estimated at 1% of credit sales, what is the amount to be entered for the adjusting entry? (a) 3,000 (b) 3,800 (c) 2,200 (d) 1,150A business has an ending balance in Accounts Receivable of 35,000; credit sales for the year of 300,000; and a credit balance in Allowance for Doubtful Accounts of 800. If the percentage of sales method is used and the percentage is estimated at 1% of credit sales, what is the ending balance in Allowance for Doubtful after the adjusting entry? (a) 3,000 (b) 3,800 (c) 2,200 (d) 1,1504MCUnder the allowance method, when an account is determined to be worthless, the journal entry to write off the account will include a (a) debit to Allowance for Doubtful Accounts. (b) debit to Bad Debt Expense. (c) credit to Allowance for Doubtful Accounts. (d) debit to Accounts Receivable.1CETonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit sales will be uncollectible. Allowance for Doubtful Accounts has a credit balance of 275. Prepare the adjusting entry at year-end for the estimated bad debt expense. (a) Based on an aging of its accounts receivable, Kyles Cyclery estimates that 3,200 of its year-end accounts receivable will be uncollectible. Allowance for Doubtful Accounts has a debit balance of 280 at year-end. Prepare the adjusting entry at year-end for the estimated uncollectible accounts.Fionas Pharmacy uses the direct write-off method of accounting for bad debt expense. Prepare the journal entry on July 25 to write off 1,320 owed by P. Wahdia.1RQ2RQ3RQ4RQ5RQ6RQ7RQUnder the allowance method, what journal entries are made if an account is collected that was previously written off?9RQ10RQCALCULATION OF NET REALIZABLE VALUE L. R. Updike owns a department store that has a 50,000 balance in Accounts Receivable and a 2,500 credit balance in Allowance for Doubtful Accounts. 1. Determine the net realizable value of the accounts receivable. 2. Assume that an account receivable in the amount of 500 was written off using the allowance method. Determine the net realizable value of the accounts receivable after the write-off.UNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES Rossins Racers has total credit sales for the year of 280,000 and estimates that 3% of its credit sales will be uncollectible. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated bad debt expense. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has al credit balance of 570. 2. Allowance for Doubtful Accounts has a debit balance of 360.UNCOLLECTIBLE ACCOUNTSPERCENTAGE OF RECEIVABLES Britos Hundai Sales and Service estimates the amount of uncollectible accounts using the percentage of receivables method. Based on aging the accounts, it is estimated that 4,500 will not be collected. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has a credit balance of 710. 2. Allowance for Doubtful Accounts has a debit balance of 305.COLLECTION OF ACCOUNTS WRITTEN OFFALLOWANCE METHOD Julia Alvarez, owner of Alvarez Rentals, uses the allowance method in accounting for uncollectible accounts. Record the following transactions in general journal form:UNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the end of the current year, the accounts receivable account of Glenns Nursery Supplies has a debit balance of 390,000. Credit sales are 2,800,000. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has a credit balance of 1,760. (a) The percentage of sales method is used and bad debt expense is estimated to be 1% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 30,330 in uncollectible accounts. 2. Allowance for Doubtful Accounts has a debit balance of 1,900. (a) The percentage of sales method is used and bad debt expense is estimated to be of 1% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 29,890 in uncollectible accounts.DIRECT WRITE-OFF METHOD Maria Rivera, owner of Rivera Pharmacy, uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form:COLLECTION OF ACCOUNT WRITTEN OFFDIRECT WRITE-OFF METHOD Comos Music Store uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form:UNCOLLECTIBLE ACCOUNTSALLOWANCE METHOD Pyle Nurseries used the allowance method to record the following transactions, adjusting entries, and closing entries during the year ended December 31, 20--. REQUIRED 1. Open the three selected general ledger accounts. 2. Enter the transactions and the adjusting and closing entries in a general journal (page 6). After each entry, post to the appropriate selected accounts. 3. Determine the net realizable value as of December 31.UNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the completion of the current fiscal year ending December 31, the balance of Accounts Receivable for Yangs Gift Shop was 30,000. Credit sales for the year were 355,200. REQUIRED Make the necessary adjusting entry in general journal form under each of the following assumptions. Show calculations for the amount of each adjustment and the resulting net realizable value. 1. Allowance for Doubtful Accounts has a credit balance of 330. (a) The percentage of sales method is used and bad debt expense is estimated to be 2% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 6,950 in uncollectible accounts. 2. Allowance for Doubtful Accounts has a debit balance of 400. (a) The percentage of sales method is used and bad debt expense is estimated to be 1.5% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 5,685 in uncollectible accounts.AGING ACCOUNTS RECEIVABLE An analysis of the accounts receivable of Johnson Company as of December 31, 20--, reveals the following: REQUIRED 1. Prepare an aging schedule as of December 31, 20--, by adding the following column to the three columns shown above: Estimated Amount Uncollectible. 2. Assuming that Allowance for Doubtful Accounts had a credit balance of 620 before adjustment, record the end-of-period adjusting entry in general journal form to enter the estimate for uncollectible accounts.DIRECT WRITE-OFF METHOD Williams Hendricks Distributors uses the direct write-off method in accounting for uncollectible accounts. REQUIRED Record these transactions in general journal form.CALCULATION OF NET REALIZABLE VALUE Mary Martin owns a department store that has a 65,200 balance in Accounts Receivable and a 5,175 credit balance in Allowance for Doubtful Accounts. 1. Determine the net realizable value of the accounts receivable. 2. Assume that an account receivable in the amount of 900 was written off using the allowance method. Determine the net realizable value of the accounts receivable after the write-off.UNCOLLECTIBLE ACCOUNTS-PERCENTAGE OF SALES Nicoles Neckties has total credit sales for the year of 380,000 and estimates that 2% of its credit sales will be uncollectible. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated bad debt expense. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has a credit balance of 430. 2. Allowance for Doubtful Accounts has a debit balance of 295.UNCOLLECTIBLE ACCOUNTS-PERCENTAGE OF RECEIVABLES Charlies Chevy Sales and Service estimates the amount of uncollectible accounts using the percentage of receivables method. Based on aging the accounts, it is estimated that 3,935 will not be collected. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has a credit balance of 245. 2. Allowance for Doubtful Accounts has a debit balance of 560.COLLECTION OF ACCOUNT WRITTEN OFFALLOWANCE METHOD Raynette Ramos, owner of Ramos Rentals, uses the allowance method in accounting for uncollectible accounts. Record the following transactions in general journal form:UNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the end of the current year, the accounts receivable account of Parkers Nursery Supplies has a debit balance of 350,000. Credit sales are 2,300,000. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has a credit balance of 1,920. (a) The percentage of sales method is used and bad debt expense is estimated to be 1% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 24,560 in uncollectible accounts. 2. Allowance for Doubtful Accounts has a debit balance of 1,280. (a) The percentage of sales method is used and bad debt expense is estimated to be of 1% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 22,440 in uncollectible accounts.DIRECT WRITE-OFF METHOD Brent Mussellman, owner of Brents Barbells, uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form:COLLECTION OF ACCOUNT WRITTEN OFFDIRECT WRITE-OFF METHOD Madonnas Music Store uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form:UNCOLLECTIBLE ACCOUNTSALLOWANCE METHOD Lewis Warehouse used the allowance method to record the following transactions, adjusting entries, and closing entries during the year ended December 31, 20--: Selected accounts and beginning balances on January 1, 20--, are as follows: REQUIRED 1. Open the three selected general ledger accounts. 2. Enter the transactions and the adjusting and closing entries in a general journal (page 6). After each entry, post to the appropriate selected accounts. 3. Determine the net realizable value as of December 31, 20--.UNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the completion of the current fiscal year ending December 31, the balance of Accounts Receivable for Andersons Greeting Cards was 180,000. Credit sales for the year were 1,950,000. REQUIRED Make the necessary adjusting entry in general journal form under each of the following assumptions. Show calculations for the amount of each adjustment and the resulting net realizable value. 1. Allowance for Doubtful Accounts has a credit balance of 2,600. (a) The percentage of sales method is used and bad debt expense is estimated to be 1.5% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 30,250 in uncollectible accounts. 2. Allowance for Doubtful Accounts has a debit balance of 1,900. (a) The percentage of sales method is used and bad debt expense is estimated to be 1.0% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 20,500 in uncollectible accounts.AGING ACCOUNTS RECEIVABLE An analysis of the accounts receivable of Matsushita Company as of December 31, 20--, reveals the following: REQUIRED 1. Prepare an aging schedule as of December 31, 20--, by adding the following column to the three columns shown above: Estimated Amount Uncollectible. 2. Assuming that Allowance for Doubtful Accounts had a credit balance of 1,750 before adjustment, record the end-of-period adjusting entry in general journal form to enter the estimate for uncollectible accounts.DIRECT WRITE-OFF METHOD Lee and Chen Distributors uses the direct write-off method in accounting for uncollectible accounts. REQUIRED Record these transactions in general journal form.Sam and Robert are identical twins. They opened identical businesses and experienced identical transactions. However, they decided to estimate uncollectible accounts in different ways. Sam elected to use the percentage of sales method, and Robert elected to use the percentage of receivables method. Listed below are the beginning balances of Cash, Accounts Receivable, and Allowance for Doubtful Accounts [items (a)-(c)], and summary transactions that occurred during the year [items (d)-(g)] for both businesses. Remember, both businesses experienced the same events: credit sales, collections of receivables, and write-offs. The only difference between the businesses is the method of estimating uncollectible accounts. REQUIRED 1. Enter items (a) through (c) in two sets of general ledger accounts: one for Sam and one for Robert. For Sam: 2. Prepare entries in a general journal (page 4) for summary transactions (d) through (g) for Sam. 3. Post the entries to a general ledger for Sam, using the following accounts and numbers. 4. Sam estimates that 1% of all sales on account will be uncollectible. Calculate the estimated bad debt expense and make the appropriate adjusting entry in a general journal. Post the entry to the general ledger accounts on December 31, 20--. 5. Compute the net realizable value of Sams accounts receivable on December 31, 20--. For Robert: 6. Prepare entries in a general journal (page 4) for summary transactions (d) through (g) for Robert. 7. Post the entries to a general ledger for Robert, using the same accounts and numbers as were used for Sam. 8. Robert bases the estimate of uncollectible accounts on an aging schedule of accounts receivable. Using the following information, compute the estimated uncollectible amounts and make the appropriate adjusting entry in a general journal. Post the entry to the general ledger accounts on December 31, 20--. All sales are billed n/30. The following aging chart is used to estimate the uncollectibles using the percentage of receivables method: 9. Compute the net realizable value of Roberts accounts receivable on December 31, 20--.Martel Co. has 320,000 in Accounts Receivable on December 31, 20-1, the end of its first year of operations. The business is new, so it has no prior experience with uncollectible accounts. In Martels overall industry, the percentage of uncollectible accounts receivable is about 3%. For companies similar to Martel in size and operations, the percentage is about 5%. Martel decides to use the overall industry experience as the basis for its estimate of uncollectible accounts. Prepare the adjusting entry on December 31, 20-1 for Martel Co.s uncollectible accounts.2CPAt the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in Allowance for Doubtful Accounts. Martel has now been in business for three years and wants to base its estimate of uncollectible accounts on its own experience. Assume that Martel Co.s adjusting entry for uncollectible accounts on December 31, 20-2, was a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts of 25,000. (a) Estimate Martels uncollectible accounts percentage based on its actual bad debt experience during the past two years. (b) Prepare the adjusting entry on December 31, 20-3, for Martel Co.s uncollectible accounts.The maturity value of a note includes both principal and interest.2TFThe difference between the maturity value of a note and the net proceeds is called discounting.4TFWhen a dishonored note is collected, interest is collected for the time between date of maturity and date of collection.Principal plus interest equals ______ of a note. (a) discount (b) net proceeds (c) interest rate (d) maturity value2MC3MC4MCAccrued interest payable is reported as a ______ on the balance sheet. (a) current asset (b) long-term asset (c) current liability (d) long-term liability1CE2CE3CE1RQ2RQ3RQ4RQ5RQ6RQ7RQ8RQ9RQOn which notes receivable and notes payable is it necessary to record accrued interest at the end of the period?11RQWhen a business borrows money from a bank on a non-interest-bearing note, how are the bank discount and proceeds calculated?What kind of account is Discount on Notes Payable, and how is it reported on the balance sheet?14RQ15RQTERM OF A NOTE Calculate total time in days for the following notes. (Assume there are 28 days in February.)2SEADETERMINING DUE DATE Determine the due date for the following notes. (Assume there are 28 days in February.)JOURNAL ENTRIES (NOTE RECEIVED, RENEWED, AND COLLECTED) Prepare general journal entries for the following transactions:5SEAJOURNAL ENTRIES (ACCRUED INTEREST RECEIVABLE) At the end of the year, the following interest is earned, but not yet received. Record the adjusting entry in a general journal. Interest on 4,000, 90-day, 7% note (for 15 days) 11.67 Interest on 7,000, 60-day, 6% note (for 18 days) 21.00 32.67JOURNAL ENTRIES (NOTE ISSUED, RENEWED, AND PAID) Prepare general journal entries for the following transactions:JOURNAL ENTRIES (NOTE ISSUED FOR BANK LOAN) Prepare general journal entries for the following transactions: July15 Borrowed 5,000 cash from the bank, giving a 60-day non- interest-bearing note. The note is discounted 8% by the bank. Sept.13 Paid the 5,000 note, recognizing the discount as interest expense.JOURNAL ENTRIES (ACCRUED INTEREST PAYABLE) At the end of the year, the following interest is payable, but not yet paid. Record the adjusting entry in the general journal. Interest on 5,000, 60-day, 7% note (for 12 days) 11.67 Interest on 2,500, 30-day, 8% note (for 9 days) 5.00 16.67NOTES RECEIVABLE ENTRIES J. K. Pratt Co. had the following transactions: 20-1 REQUIRED Record the transactions in a general journal.NOTES RECEIVABLE DISCOUNTING Marienau Suppliers had the following transactions: REQUIRED Record the transactions in a general journal.ACCRUED INTEREST RECEIVABLE The following is a list of outstanding notes receivable as of December 31, 20--: REQUIRED 1. Compute the accrued interest at the end of the year. 2. Prepare the adjusting entry in the general journal.NOTES PAYABLE ENTRIES Milo Radio Shop had the following notes payable transactions: REQUIRED Record the transactions in a general journal.ACCRUED INTEREST PAYABLE The following is a list of outstanding notes payable as of December 31, 20--: REQUIRED 1. Compute the accrued interest at the end of the year. 2. Prepare the adjusting entry in the general journal.TERM OF A NOTE Calculate total time in days for the following notes. (Assume there are 28 days in February.)CALCULATING INTEREST Using 360 days as the denominator, calculate interest for the following notes using the formula I = P R T.DETERMINING DUE DATE Determine the due date for the following notes. (Assume there are 28 days in February.)JOURNAL ENTRIES (NOTE RECEIVED, RENEWED, AND COLLECTED) Prepare general journal entries for the following transactions:JOURNAL ENTRIES (NOTE RECEIVED, DISCOUNTED, DISHONORED, AND COLLECTED) Prepare general journal entries for the following transactions: